CALGARY, ALBERTA--(Marketwired - March 22, 2017) - GRANITE OIL CORP. ("Granite" or the "Company") (TSX:GXO)(OTCQX:GXOCF) is pleased to release its financial results for the year ended December 31, 2016, and to provide an overview of the operational highlights of the 2016 financial year. Granite has filed its audited financial statements for the year ended December 31, 2016 and related Management Discussion & Analysis with the applicable Canadian securities regulatory authorities. Granite's annual financial materials may be viewed in their entirety on www.sedar.com and on the Company's website at www.graniteoil.ca.

2016

Granite's focus in 2016 continued to be setting up its unique, large oil-in-place asset for the long-term, with the goal of maximizing value and returns to our shareholders. Despite challenging times in the industry, the Company made significant strides during the year towards this goal through its organic development formula. With its Gas Injection Enhanced Oil Recovery ("EOR") scheme up to speed and efficiency gains realized across the board, the Company has proven its ability to add producing barrels at costs that offer returns during periods of low commodity prices. With twenty years of potential drilling opportunities and most of its oil yet to be recovered, the Company is confident it offers its shareholders a model for long-term, consistent, organic returns.

2016 Financial and Operating Highlights

Financial and operational highlights for the three and twelve month periods ended December 31, 2016 are set out below and should be read in conjunction with the financial statements and related management's discussion and analysis for the year ended December 31, 2016 that are available for review at www.graniteoil.ca and www.sedar.com. This is the sixth interim period completed by Granite following its disposition of certain oil and gas properties pursuant to its May 2015 corporate reorganization. Prior period information is not presented in the following table due to its limited comparability resulting from these dispositions.

Funds from operations and funds from operations per share are not recognized measures under International Financial Reporting Standards (IFRS). Refer to the commentary in the "Reader Advisory" under "Non-GAAP Measurements" for further discussion.

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The Company uses the weighted average common shares (basic) when there is a net loss for the period to calculate net income (loss) per share diluted. The Company uses the weighted average common shares (diluted) to calculate the funds from operations diluted.

Net debt, which is calculated as current liabilities (excluding derivative financial instruments) and bank debt less current assets (excluding derivative financial instruments), is not a recognized measure under IFRS. Please refer to the commentary in the "Reader Advisory" under "Non-GAAP Measurements" for further discussion.

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For a description of the boe conversion ratio, refer to the commentary in the "Reader Advisory" under "BOE Presentation".

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Commencing in March 2016, the Company began injecting the majority of its natural gas production into the Alberta Bakken property pursuant to the EOR scheme.

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Combined average realized prices includes all oil, gas and NGL sales revenue, excluding other income.

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Operating netback, which is calculated by deducting royalties, operating expenses and transportation expenses from oil and gas revenue and adjusting for any realized hedging on financial instruments, is not a recognized measure under IFRS. Please refer to the commentary in "Reader Advisory" under "Non-GAAP Measurements" for further discussion.

2016 Highlights

Record finding and development costs, including the change in future development capital:

$13.02/boe on a proved developed producing basis, resulting in a recycle ratio of 2.1 times;

$4.96/boe on a total proved basis, resulting in a recycle ratio of 5.6 times; and

$4.62/boe on a proved plus probable basis, resulting in a recycle ratio of 6.0 times.

Executed a $21.5 million, 100% organic capital expenditure program on the Company's Bakken Property, a 46% decrease in year-over-year expenditures, with the following highlights:

Drilled 10 (10.0 net) wells with a success rate of 100%, and reduced the average well cost to $1.25 million, a 50% year-over-year decrease;

Converted three producing wells to gas injectors and increased gas injection rates under the EOR scheme by 66%; and

Acquired 50,000 net acres of strategic Bakken lands.

Continued improvement in drilling results throughout the year, with gas injection and completion-optimization strategies providing consistent well results from its second-half, five-well drilling program, with average IP rates of:

IP30 of 294 bbls/d of oil

IP90 of 213 bbls/d of oil

IP180 of 192 bbls/d of oil

Continued to improve overall decline rates with up to 15 wells currently flowing oil, including several restricted wells, as the Company optimizes its injection scheme.

Proved the effectiveness of 200 metre well spacing within the area of its gas injection EOR scheme. With drilling inventory of over 130 potential well locations considered to be material, the Company has 20 years of development and exploitation opportunities on its Bakken Property under its current model.

Following strategic Corporate reorganization decisions made in 2016, the Company's G&A is budgeted to drop 25% to $2.25/boe in 2017 as it continues to realize efficiency gains. The Company recorded a one-time severance charge in the fourth quarter.

The Company achieved operating costs of $6.65/boe for the fourth quarter of 2016 excluding an adjustment booked in the period relating primarily to prior year's facility equalization expenses.

Maintained a strong balance sheet, exiting the year with $31.8 million of net debt on a current bank line of $60 million.

2017 Operations Update

Granite's drilling success continued into 2017 with the three wells drilled in the first quarter performing comparably to the best wells of 2016. Two of the three wells drilled in the first quarter tested reduced offset spacing of just over 100 meters with the goal of further improving long-term oil recovery from the pool. The Company is encouraged by the positive results from these wells and the implication these results have on increasing the Company's potential drilling inventory and ultimate oil recovery.

With increased demand for oilfield services, the Company faced delays in accessing both cementing and hydraulic fracturing crews during the quarter, delaying on-stream production from the wells drilled in the first quarter. The Company believes it can mitigate these delays with further operational improvements and timing advantages going forward.

The Company continued to expand the gas injection EOR infrastructure in the first quarter with the conversion of one formerly producing oil well to a gas injection well and shut-in a second producing well in preparation for conversion early in the second quarter. As well, approximately 2,000 horsepower of additional gas injection compression facilities were set on site. These facilities will be brought on-stream in the second quarter to take advantage of lower demand for services during spring break up and will increase total injection horsepower by approximately 52%. This will provide compression capacity that will support several years of drilling.

The Company's first quarter production is expected to average approximately 3,100 boe/d (95% oil), despite service delays and adverse weather conditions.

2017 Outlook

With the efficiency gains made throughout 2016 and its increasingly solid production base, Granite is well-positioned to manage continued uncertainty in commodity pricing throughout 2017. Capital expenditures for 2017 are expected to total $16.5 million, a 23% decrease year-over-year, and result in average production growth of 7% to approximately 3,050 bbl/d of oil, with the yearly dividend maintained at $0.42 per share. With an average WTI price of $55 USD this will result in year-end net debt of $33.2 million and a net debt to cash flow ratio of 1.1. Anticipated capital expenditures include approximately $3.0 million allocated towards high-impact, strategic exploration and pool delineation projects, which Granite has the flexibility to adjust should commodity prices warrant. Additionally, the Company is well-hedged through 2017, with 1,000 bbl/d hedged at an average price of $48.05 USD/bbl through the first half of 2017, and 750 bbl/d hedged at an average price of $52.23 USD/bbl through the second half of 2017, reducing its exposure to price volatility.

With the capital program dedicated predominantly towards drilling and the efficiency at which Granite can add producing barrels, Granite is confident it will continue to add value to shareholders despite the challenges in the commodity price environment.

Reader Advisories

Forward-Looking Statements. Certain statements contained in this news release may constitute forward-looking statements or information (collectively, "forward-looking statements" or "statements"). These statements relate to future events or Granite's future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. Statements relating to "reserves" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, this news release contains forward-looking statements, pertaining to the following: forecasted capital expenditures and plans, drilling and development plans, Granite's financial strength, anticipated production rates, projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, oil and natural gas production levels, the success of the enhanced oil recovery scheme,, treatment under governmental regulatory and taxation regimes and expectations regarding Granite's ability to raise capital and to continually add to reserves through acquisitions and development.

Granite believes the expectations reflected in such forward-looking statements and the assumptions upon which such forward-looking statements are based, to be reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon by investors. These statements speak only as of the date of this news release and are expressly qualified, in their entirety, by this cautionary statement. Granite's actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: volatility in the market prices for oil and natural gas; general economic conditions, stock market volatility and ability to access sufficient capital from internal and external sources, uncertainties associated with estimating reserves; uncertainties associated with Granite's ability to obtain additional financing on satisfactory terms; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel. Readers are cautioned that the foregoing list of factors is not exhaustive. Management has included the above summary of assumptions and risks related to forward-looking information provided in this news release in order to provide securityholders with a more complete perspective on Granite's future operations and such information may not be appropriate for other purposes. Additional information on these and other factors that could affect Granite's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

With respect to forward-looking statements contained in this news release, Granite has made assumptions regarding, among other things: prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; the legislative and regulatory environments of the jurisdictions where Granite carries on business or has operations; future production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; ability to market oil and natural gas successfully and Granite's ability to obtain additional financing on satisfactory terms.

The forward-looking statements represent Granite's views as of the date of this document and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. Granite has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking statements will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Non-GAAP Measurements. This news release contains the terms "net debt", which represent current assets less current liabilities, excluding current derivative financial instruments, is used to assess efficiency, liquidity and the Company's general financial strength. No IFRS measure is reasonably comparable to working capital deficit. This press release uses the term "operating netback" or "netback", which is calculated by deducting royalties, operating expenses and transportation expenses from oil and gas revenue and adjusting for any realized hedging on financial instruments, is not a recognized measure under IFRS.

BOE Presentation. References herein to "boe" mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.